India's government has decided to defer spectrum payments that telecommunication companies need to pay, a move that is likely to benefit companies like Bharti Airtel and Vodafone Idea.
The cabinet approved a proposal to defer the spectrum payments for two years to mitigate the financial stress faced by the telecom services sector, according to a statement posted on the government's website late Wednesday.
Last month, India's top court ruled that telecom companies operating in the country need to pay 920 billion Indian rupees ($12.81 billion) to the government in a dispute over licensing fees.
Telecom companies including Bharti Airtel and Vodafone Idea had said the court's decision could severely hurt their finances and sought relief from the government.
Earlier this month, Bharti Airtel posted a INR230.45 billion net loss for the July-September quarter as it made provisions for the payments. Similarly, Vodafone Idea posted a net loss of INR509.21 billion for the quarter ended September, marking its worst quarterly loss ever.
"Deferment of spectrum auction installments will ease the cash outflow of the stressed telecom service providers and facilitate payment of statutory liabilities and interest on bank loans," according to the statement.
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